Correlation Between IAR Systems and FastPartner
Can any of the company-specific risk be diversified away by investing in both IAR Systems and FastPartner at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining IAR Systems and FastPartner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IAR Systems Group and FastPartner AB, you can compare the effects of market volatilities on IAR Systems and FastPartner and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in IAR Systems with a short position of FastPartner. Check out your portfolio center. Please also check ongoing floating volatility patterns of IAR Systems and FastPartner.
Diversification Opportunities for IAR Systems and FastPartner
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IAR and FastPartner is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding IAR Systems Group and FastPartner AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FastPartner AB and IAR Systems is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on IAR Systems Group are associated (or correlated) with FastPartner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FastPartner AB has no effect on the direction of IAR Systems i.e., IAR Systems and FastPartner go up and down completely randomly.
Pair Corralation between IAR Systems and FastPartner
Assuming the 90 days trading horizon IAR Systems Group is expected to generate 0.97 times more return on investment than FastPartner. However, IAR Systems Group is 1.03 times less risky than FastPartner. It trades about 0.01 of its potential returns per unit of risk. FastPartner AB is currently generating about 0.0 per unit of risk. If you would invest 14,284 in IAR Systems Group on September 1, 2024 and sell it today you would earn a total of 216.00 from holding IAR Systems Group or generate 1.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.78% |
| Values | Daily Returns |
IAR Systems Group vs. FastPartner AB
Performance |
| Timeline |
| IAR Systems Group |
| FastPartner AB |
IAR Systems and FastPartner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IAR Systems and FastPartner
The main advantage of trading using opposite IAR Systems and FastPartner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IAR Systems position performs unexpectedly, FastPartner can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in FastPartner will offset losses from the drop in FastPartner's long position.| IAR Systems vs. CellaVision AB | IAR Systems vs. HMS Networks AB | IAR Systems vs. Enea AB | IAR Systems vs. Know IT AB |
| FastPartner vs. Samhaellsbyggnadsbolaget i Norden | FastPartner vs. AB Sagax | FastPartner vs. Atrium Ljungberg AB | FastPartner vs. Nyfosa AB |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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